Chief financial officer says Stanford sealed fraud conspiracy in 'brotherhood ceremony' with Antigua supervisor
HOUSTON, TX - Accused fraudster Allen Stanford's larger-than-life story has taken a turn for the surreal, with assertions he became 'blood brothers' with the chief Antiguan regulator, according to allegations made as part of a plea deal with Stanford's former chief financial officer, James Davis.
Davis's plea deal, filed on August 27, takes the Stanford trial from the sublime to the ridiculous, by accusing the Texan billionaire of making a "blood oath" with Leroy King, Antigua's chief banking supervisor, in 2003, to hide a $7 billion fraud at the Stanford Financial Group.
Davis has entered a guilty plea to fraud and conspiracy charges made by a Federal District Court in Houston, alleging Stanford ordered him to report false revenue and false investment portfolio statements to banking supervisors as far back as 1988, when Stanford ran an offshore bank on the Caribbean island of Montserrat.
"I did wrong. I'm sorry. I apologise. And I take responsibility for my actions," said Davis in a post-hearing statement.
Stanford, who was knighted by Antigua and Barbuda in 2006 as the leading employer within the Caribbean island economy, is alleged to have bribed King through payments to a Swiss bank account, as well as gifting him Super Bowl sports tickets.
In return, King - who Davis says referred to Stanford as "Big Brother" - is alleged to have colluded in a fraud conspiracy to hide a multibillion-dollar international Ponzi scheme from US and other regulators.
Reports first surfaced in February that US authorities, including the FBI, the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (Finra) and Florida state supervisors, were investigating Stanford's financial network for fraud.
Davis's plea alleges Stanford and he attempted to cover up evidence of fraud throughout the middle of 2008 by inflating the value of assets through a bogus Antiguan real estate deal that would convert a $65 million transaction into a fictitious $3.2 billion asset.
Stanford and Davis are accused of defrauding 30,000 investors out of $7 billion, filing false disclosures to investors and regulators, in addition to diverting more than $1.6 billion into undisclosed personal loans to Stanford, and conspiring to obstruct an SEC investigation.
The FBI served Stanford with an SEC civil compliant on February 19, but he was not arrested until June 18, after US authorities, still suffering media strife from the Madoff scandal, had been forced to admit they did not know Stanford's location.
Stanford, who has vociferously denied any wrong-doing in the case, was also due to appear in court on August 26, but a soaring pulse rate caused him to be hospitalised earlier that morning, with his lawyers subsequently saying he must either undergo angioplasty or have a heart catheter fitted.
More on Regulation
Crackdown on "high risk" derivative products drives up dealers' costs
Dealers, regulators and distributors split on way forward for key information document risk indicators
Provisions on documentation eased but industry says more work needed on advertising rules
Dealers must simplify if there is "no coherent rationale" to structures
Sign up for Risk.net email alerts
Sponsored video: Elseware
Oxford professor David Vines argues that the carrot is as important as the stick
Sponsored webinar: IBM
Watch highlights of this year's London conference
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.